Govt extends deadline for Newmont divestment

The government is extending the deadline for PT Newmont Nusa Tenggara (NNT) to divest a 7 percent stake in the company because of difficult negotiations, Energy and Mineral Resources Minister Darwin Zahedy Saleh said Monday

“The Finance Minister has decided to delay the deadline and give more time for the government and the company to find the best solution for the divestment,” Darwin said after a meeting with the House of Representatives’ Commission VII overseeing energy.

According to the contract between the government and the company, the remaining 7 percent stake must be divested by March of this year. As reported earlier, the government said it was ready to acquire the stake but had difficulties figuring out which state agencies or enterprises would absorb the stake.

State-Owned Enterprises Minister Mustafa Abubakar said last week that state companies were not interested in taking over the 7 percent stake worth US$271.6 million because of its reluctance to be a minority shareholder.

“State firms have decided not to absorb Newmont’s shares,” he said.

NNT operates the Batu Hijau gold and copper mine in West Nusa Tenggara. Under a mining contract signed in 1986, the company’s foreign shareholders, Newmont Indonesia Limited (NIL) and Nusa Tenggara Corporation (NTMC), an affiliate of Japan’s Sumitomo Corporation, must divest 51 percent of their shares to local investors after 10 years of operation.

As local companies already held a 20 percent stake (PT Pukuafu Indah with 17.8 percent and PT Indonesia Masbaga Investama with 2.2 percent) foreign shareholders in the company are required to divest 31 percent.

The contract stipulates that NNT’s foreign shareholders have to offer their shares to the government first. If the central government declines to acquire the stake, the shareholders can sell the stake to other local parties.

NNT’s foreign shareholders have so far sold 24 percent of the shares to a joint venture between PT Multicapital, a business unit of coal giant PT Bumi Resources, and the local administration, called PT Multi Daerah Bersaing (MDB).

In late 2010, the provincial government of West Nusa Tenggara sent a letter conveying its interest in taking over the remaining 7 percent stake. However, Coordinating Economic Minister Hatta Rajasa said last week that the stake would be acquired by the central government.

Hatta said the government would buy the stake without taking funds from the state budget or state-owned enterprises, but he declined to elaborate further.